Visit vanguard.com or contact your broker to obtain a Vanguard ETF or fund prospectus which contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss in a declining market.

Stocks of companies in emerging markets are generally more risky than stocks of companies in developed countries.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.

All investing is subject to risk, including possible loss of principal.

In a recent Wall Street Journal article titled “Financial mistakes newlyweds make,”* the author and several financial advisors urge couples to have the “money talk” before walking down the aisle.

The article provides several practical tips for opening the dialogue with your significant other. One financial advisor even recommends carving out time for a monthly “money date” over breakfast. While portfolio talk over poached eggs may not be your style, there are clear benefits to laying your financial cards on the table before you take the plunge. Honest discussion about your debts, general agreement on your saving and spending habits, and alignment of your long-term investing goals with those of your partner seem like reasonably critical components of happily-ever-after.

So why do so many couples flat-out avoid the discussion? A recent USA Today poll asked readers, “Have you addressed how you would manage collective finances before marriage?” A brave 51% said yes, they’ve had the dreaded money talk. But 42% admitted to skipping the discussion entirely and an apparently confused 7% of respondents weren’t sure whether or not they’d addressed the issue.

Maybe people avoid the topic so much because it hits upon too many emotions for most couples. None of us are perfect and money is often a very private issue. Our relationship with money often reflects some complex combination of personal experiences: how much of it we had or didn’t have growing up, money mistakes we might have made in the past, painful financial circumstances surrounding a divorce, or even money behaviors that are driven by our cultural backgrounds.

The Journal article evokes images of young newlyweds, eager to jointly tackle their combined financial goals. But many of us commit to a relationship a bit later in life and have become accustomed to managing our assets for years without any input from a significant other. Suddenly allowing another person—even one you love enough to marry—to peer into your spending habits, scrutinize the adequacy of your savings, and potentially pass judgment on your past investment decisions leaves you in a pretty vulnerable position. (I know I just made the money talk sound worse than a root canal. But it really doesn’t have to be that bad.) And I don’t think it requires anything as rigid as a “monthly money date,” either. What it does require is thinking like a team, which can be new (and perhaps hard) for some of us.

So tell me, what’s been the biggest influence on your views toward managing personal assets, and did you find it difficult to broach the subject with your partner? What tips can you offer others who may be struggling to address the issue with their soon-to-be spouse or significant other?

* Available at WSJ.com. This link will open a new browser window. Except where noted, Vanguard accepts no responsibility for content on third-party websites.

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Karin Risi

Karin Risi is a principal and head of Vanguard Retail Investor Group. Since joining Vanguard in 1997, she’s held various roles within the organization’s Corporate, Institutional, and Retail divisions. Most recently, Ms. Risi was head of Vanguard Personal Advisor Services®, which provides Vanguard clients with ongoing asset management and investment advice consultations with Certified Financial Planner™ professionals.
Before joining Vanguard, Ms. Risi was an investor relations analyst with Sunoco Inc. She holds a B.S. in finance and an M.B.A. from Villanova University.

Comments

Anonymous | August 11, 2011 11:18 am

Like many, we started out with two incomes, a fresh marriage, and strong portfolios each. 12 years, two kids, one less job, and one turbulent lay-off-now-newer -job with a significantly lower salary later, we marvel at how easy life was 12 years ago, financially speaking! Today the budgeting is more important than ever yet months go by when we do spend more than we bring in – and it’s not for movies and popcorn, it’s for paying for a home that theoretically we still ought to be able to afford but zaps more than half of the monthly budget. Luckily we have strong retirement funds, but the meantime is certainly a lean-time and consists of big decisions, like bringing back a second income, having stay-cations instead of vacations, and constantly putting the blinders on to focus on needs and shielding our eyes from all the wants. Oh how I wish for 1999 again!

Anonymous | August 11, 2011 10:57 am

Talking about budgeting and investing strategy is very important in building a life together. Opening a joint account to which each partner contributes is a safe way to start. A word of caution – if you are older and have any kind of assets, do ensure you have a prenup and realize that if you use any of “your” money toward a joint investment of any kind, it will no longer be “your” money.

Anonymous | August 11, 2011 10:31 am

Karin,

You ask when did I have “the talk?” Oh that’s easy. It was thirty-four years ago while I was in debt, in college and madly in love with my then new girlfriend. During our first date I quickly shared with her how really broke I was. Always a competitor, new girlfriend used this opportunity to reveal how truly desperate times were for her as well.

Mercifully, both of us seemed to share an overly pessimistic view of our current and future financial prospects. Over the years, however, we did try to live the life to Tom Stanley and Richard Danko’s “Millionaire Next Door.” I suppose things all worked out for us.

Let me close by saying that one of the highest complements ever paid me was by own son during his high school years. Back then he was attending a private school in Northern Virginia where all of his friends had access to the normal toys of material wealth. After being told he could not have “something” (I cannot even recall now what the “something” was) because we could not afford it, he lamented “we have to be the poorest rich people I know.” I could only laugh.

Anonymous | August 11, 2011 10:25 am

My spouse and I have a tough money relationship. My spouse loves to make up a budget. Unfortunately, once it is made, that is the last my spouse looks at or thinks about that budget. I think long-term, and am very concerned about having very strong positive cash-flow. My spouse tends to look at the current-day account balance and determine from that whether we’re ‘ok’ or not. Unfortunately, and despite repeated and diverse efforts, I cannot get my spouse to work with me, and more importantly to follow through when it comes to money matters. A targeted, in-depth ‘money talk’ is not something we had prior to marriage, and we struggle a lot now with how to reconcile our distinct differences.

Anonymous | August 11, 2011 10:12 am

Anonymous | August 11, 2011 12:58 am

Before we got married we talked pretty extensively about where are hearts and minds were concerning the big four: money, in-laws, children and faith. We talked the most about money.

Every month, I work on the budget, present it to my wife get her thoughts and plans, rework it and present where we are (I’m the numbers nerd, she’s the free spirit.) We are careful to always keep more than we spend. This is all the more important considering I have an irregular income and am self-employed.

Our marriage is two years old this week and going strong because we are on the same page with money. You can tell a lot about how a person handles life by how they handle their money.

Anonymous | August 3, 2011 11:32 am

A better response – one of us was/is exceedingly frugal and clips the coupons, collects the receipts for review versus the credit card statements, etc. One of is better at viewing the big picture and keeping good mental ledgers for incoming and outgoing funds and prides spending a little more today to gain longer term utility. We first focused on getting a positive cash flow of X amount into our shared checking account – the only one we maintain. We then divided tasks by what we are naturally better at – making all the bills lined up each month and carefully planning shopping expiditions versus making long term investment decisions and actively paying the balance of the primary credit cards (which are used for our protection and to gain cash back – not for carrying balances.) Any time there is an anomalous change in our balances which both of us see on a weekly if not daily basis, we talk about it.

I would encourage new couples to figure out what their strengths are in financial matters, leverage them and to have a plan whereby each person has visibility and a reason to keep an eye on the family finances.

Anonymous | August 3, 2011 11:23 am

We are lucky to be in the position where we marvel at our bank account growing each month… so the money talk is not overly difficult. Should we pay off the car or put a lump sum into a Roth IRA… we are thankful to be making these type of decisions.

Anonymous | July 23, 2011 11:25 pm

We started talking about our finances when we got engaged. Before our finances merged, we began creating our separate budgets while sitting together at the same table. This allowed us to talk about the choices we were making before our money “became one.” When we got married, the conversations were not always easy, but the more we talked, the more aligned our goals and spending habits became. Because we started early, we were able to pay off 64k in debt in our first two years of marriage working as teachers. Now, money is no longer a touchy subject, but rather something we enjoy talking about!

Anonymous | July 23, 2011 3:07 pm

A wry old Texan-Phil Gramm-I think, said “Your either in the wagon or your helping to pull it” For the better part of forty years my wife and I have been pulling that wagon together and for the most part, in the same direction. Takes no small amount of communication though.Oh yeah,One other thing ,We both know the difference between a want and a need.

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Visit vanguard.com or contact your broker to obtain a Vanguard ETF or fund prospectus which contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss in a declining market.

Stocks of companies in emerging markets are generally more risky than stocks of companies in developed countries.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.

All investing is subject to risk, including possible loss of principal.